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This is the biggest headache for Paytm and other app companies in India

This is the biggest headache for Paytm and other app companies in India

This is the biggest headache for Paytm and other app companies in India

Taslima Khan

Something as insignificant as a mobile recharge package worth Rs 10. For companies spending big money on making their apps stand out amid the clutter, this is a huge problem.

| ET Bureau | Updated: May 4, 2018, 10:31AM IST

To avail the incentives, several users install and uninstall apps multiple times using different internet addresses or device IDs.

Getting someone to install a mobile application once can be a challenge, but throw in a little something and they might be willing to download the app multiple times.

Something as insignificant as a mobile recharge package worth Rs 10. For companies spending big money on making their apps stand out amid the clutter, this is a huge problem.

“The problem is real and we see that on an everyday basis,” said Deepak Abbot, senior vice president at India’s biggest mobile payments company Paytm. “It is more rampant on third-party platforms or ad networks outside Facebook and Google.”

Several networks, according to him, entice users to install an app by offering cashbacks or other benefits such as recharge packs.

To avail the incentives, several users install and uninstall apps multiple times using different internet addresses or device IDs.

About 20% of Paytm app downloads are fake, according to the company. That refers to users installing and deleting the app without spending any time on it or engaging in any transaction, resulting in nil returns on the cost incurred in getting users to install the app.

Indian internet companies are grappling with a sharp increase in such instances of mobile fraud even as increasing traffic to their mobile platforms and driving app installations have become critical for growth in a hyper-competitive environment. Fraud related to mobile app installations in India is 1.7 times higher than the global average, with 16.2% of the app installations in the country being fraudulent, US advertising and marketing company TUNE said in a report last year.

“India is the No. 1 country in terms of organic and inorganic app installs but we have seen an 85% increase in fraudulent installs of apps in the last one year,” said Sanjay Trisal, country manager, India, at Tel Aviv-headquartered mobile marketing analytics and attribution firm AppsFlyer that works with more than 450 companies here including Shopclues, Paytm and Goibibo. “While the incentive for fraud in terms of parameters such as money made per click is much higher in other markets, India is an attractive country for fraudsters due to the sheer volume of installs.”

Attribution companies specialise in fraud detection and prevention technologies. They also help measure app engagement and return on investments on marketing budgets of companies.

For internet companies, growth has three legs: organic growth, which is a function of promotional activities and brand campaigns; paid traffic from ad networks; and partnerships with multiple companies to grow traffic.

However, multiple categories of fraud are turning business metrics upside down and increasing advertising costs since companies have to find a way to fix these. Fraudulent traffic is worrisome for companies because though they end up paying for it unawares, the growth in traffic doesn’t contribute to business growth.

The most prevalent mobile frauds in India include: ‘click fraud,’ which pertains to an ad network generating fake clicks; ‘attribution fraud,’ or claiming credit for an app installation even if a user has downloaded the app through organic channels; ‘device fraud,’ wherein multiple installations are claimed from the same device by changing the device’s unique IMEI number using software; ‘IP fraud,’ which involves multiple clicks from a blacklisted IP address; and ‘incentive fraud,’ wherein users are incentivised to install an app, which doesn’t result in lasting engagement.

Instances of fraud that can be effected by ad networks, publishers or individual fraudsters are constantly evolving with multiple new layers emerging rapidly, confounding internet companies.

“Everyone is getting smarter,” said Pawrush Elavia, director, growth and digital, at music streaming company Saavn.

“The worst part is fraud networks wrongly claiming (an app installation to be)… coming from (their) network. That’s the worst part because I am having to pay for a loyal person (user) whom I actually need not be paying for.”

Although paying ad networks helped increase the number of new users for Saavn, several of these users were neither listening to songs nor spending time on the app, Elavia said. “That was the end point and we realised we needed to fix this.”

Companies are adopting various methods to counter the menace.

Some are investing in building fraud-detection technologies, while others are partnering with platforms like AppsFlyer and Seattle-headquartered analytics and performance marketing platform TUNE that specialise in detecting such frauds. However, no solution is foolproof, say the companies.

Paytm competitor MobiKwik, which had been working with more than 25 ad networks to acquire users, has become very choosy about whom it works with. “We have blacklisted a few ad networks, although that is not a permanent solution,” said Damandeep Singh Soni, head of marketing and growth at MobiKwik. “We are also working very closely with attribution companies to detect fraud cases early on, while we want our folks to focus on growth.”

A direct corollary of these instances of fraud is acquisition costs spiralling up and increasing losses for companies.

Saurabh Aggarwal, CEO at Sequoia Capital-backed mobile gaming company Octro, said the company witnessed multiple instances of fraud about six months ago and started taking corrective steps. Octro’s most popular app is the card game Teen Patti, which has been downloaded nearly 50 million times.

“One of the most serious cases we have encountered is attribution fraud. At the end of the day, we bid for getting fresh installs but we figured out that a lot of money we ended up paying the ad network was for organic installs,” said Aggarwal.

Octro stopped using affiliatemarketing channels, brought down the number of ad networks it was working with to four from about 10, and refocused its budget to work with only giants such as Facebook and Google that have their own advertising space and software development kits to serve advertisements. “We took a decision to work with only top-tier companies for better chances of getting genuine traffic even though the cost involved in getting installs has gone up by a few percentage points,” said Aggarwal.

Choosing the right payment methods for ad networks can also help. “There are different models for paying the networks. One is cost per click, where the maximum fraud happens. If it is cost per transactions, we are less affected,” said Abbot of Paytm, which now works only with Google and Facebook since they offer a cost per installs model.

With paid marketing channels becoming increasingly unreliable, are internet companies trimming expenditure on paid channels? Yes, in a big way. “In India, over the last one year, 70% of expenditure on paid marketing has moved to re-targeting, or getting (registered) users back to an app, as opposed to investing in getting fresh traffic,” said Trisal of AppsFlyer.

Ad networks say they, too, are engaged in battling fraud as they work both with advertisers and publishers. “All major ad networks are working towards a fraud-free system, where they are challenged by increasingly evolving fraudsters on one hand and insufficient transparency from the marketer on the other,” said Dippak Khurana, CEO of ad network Vserv, which is backed by IDG Ventures India and Maverick Capital Ventures.

The company has engaged with independent companies that provide mobile fraud-detection tools.

Several internet companies, though, are moving away from rabidly chasing new installations and are instead focusing on improving engagement with users.

“The challenge is in our category is that if we use the push approach, it doesn’t work because then the uninstalls become really, really high. We have moved away from that approach,” said Sneha Roy, head of marketing at online furniture retailer UrbanLadder that mainly works with Facebook and Google to get past users to install its app again. “We let customers browse through our mobile website and develop some engagement that kind of pushes installs.”

Who is fraud here. If the company is looking for loyal customers, they should be doling out benefits for loyal customers. Why should they try and attract ''new'' customers and assume them to be loyal. This is like calling a person a thief if he takes your marketing brochure and does not make a purchase. If these companies want to give benefits to loyal customers who regularly do transactions with them, let them give cashback on every 5th transaction. If they want to give benefits to customers who spend time on their apps, give them benefits on the time they have the app open and number of clicks.

How can installing and uninstalling apps be called fraud. Companies throw freebies to attract customer and customer takes that One freebie or cashback and leaves. Paytm gives special benifits to 1st time users.

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